Eskom long-term strategy by September

JOHANNESBURG - Eskom will complete its long-term strategy by September to ensure sustainability through revenue maximisation, improved municipal debt collection and measures to slow down runaway costs.

Eskom interim chief executive Phakamani Hadebe yesterday told the utility’s state of the electricity system briefing in Johannesburg that the board and Public Enterprises Minister Pravin Gordhan had agreed that the strategy should be completed by September this year.

Hadebe said that there was mutual understanding between management and the board that things needed to be done differently for the utility to be sustainable.

“We have to maximise revenue, municipal debt is a challenge that we are facing,” Hadebe said. “If we do not deal with this issue, it is going to be a challenge. Investors are worried about this. They want us to show that we have the power to take decisions. Accordingly, we will deal with those municipalities that do not pay.”

Hadebe said Eskom also had to deal with its operational and capital expenditure costs.

Yesterday’s briefing took place against the backdrop of rising anxiety about electricity supply ahead of winter as Eskom battles low coal stock levels at a number of its power stations.

Hadebe attributed the utility’s current coal problems to a number of factors. These included the under investment in so-called cost-plus mines due to lack of funds.

This, he said, put a strain on the supply of coal. Secondly, one of Eskom’s coal suppliers, Tegeta Exploration and Resources, under-delivered. As a result, Eskom had to divert coal from other mines. Tegeta supplies Hendrina, Komati and Majuba power stations.

Hadebe moved to allay fears of load shedding, saying the utility was producing enough electricity to avoid load shedding. “We are comfortable on what we have,” he said.

Eskom said that coal stockpiles across all coal-fired power stations were at an average of 35 days, excluding Medupi and Kusile. It said there were plans to improve coal stockpile levels at its six power stations that were currently below minimum requirements.

Additional supplies

Eskom said its coal recovery plan included securing additional coal supplies and a redirection of coal stock from other power stations’ coal yards to address the imbalance at the six power stations.

Eskom last week said that there were seven power stations with low coal stock levels.

Komati power station stock levels have since moved above the targeted 20-day level, said Hadebe.

“If we are lucky and if (things) work according to the projections, we are hoping that in one to two weeks’ time that number will have decreased to five,” he said.

The utility said it would conclude an interim coal supply agreement with the Tegeta business rescue practitioners to enable coal supply to Hendrina power station whilst the business rescue process was in progress. Hadebe said it was negotiating tenders for 100 million tons of coal for the next five years.

“The challenge of coal stock levels below the required target at some of our power stations is not ideal, more especially as the organisation prepares for the traditionally higher energy usage period in winter,” he said.